One of the most distressing developments around entertainment giant Paramount Skydance (PSKY) and its potential purchase of Warner Bros. Discovery (WBD) is the recent revelation that, if the deal actually is allowed to go through, a set of Middle Eastern sovereign wealth funds will suddenly own a major part of this operation. Considering just what that means has left investors a bit concerned, and shares slipped fractionally in the closing minutes of Thursday’s trading.
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The sovereign wealth funds of Qatar, Saudi Arabia, and the United Arab Emirates are all set to put a combined total of around $24 billion into the deal, reports note. But what do they get with that? On the surface, the answer is simple: they get to buy in at the early stages of a deal that will ultimately produce a streaming platform with an audience on par with Disney’s (DIS) operation. Reports suggest that the combined force of Paramount+ and HBO MAX would ultimately produce a platform smaller than Netflix’s (NFLX), but close enough to Disney+ and its properties that a clear number two would be difficult to measure.
There are other possibilities as well, including the notion of “soft power.” Soft power is basically a kind of power that is not overt, but rather depends on things like culture and goodwill to influence preferences. Having access to a platform the size of Paramount+ / HBO MAX would go a long way toward providing that kind of power. As part owners of the operation, they would certainly have some say, even if unofficially. They would also have a percentage of the profit generated due them.
They Would Also Have a Piece of This
It turns out that the latest Yellowstone spinoff, Marshals, is doing great things for Paramount. This 13-part neo-Western spinoff is delivering. Not only did the show rank highly by itself on Paramount+, but it has also been renewed for a second season already. That kind of high-speed approval is a good sign that the network is happy. If the network is happy, then the fans will be too, because this show is probably going to be around a while.
With some reports calling it “chock-full of potential,” that bodes well for the series, and gives Paramount another winner at a time when it needs high-value content to pull users into the fold. It also gives those Gulf State wealth funds a reason to be happy about their purchase.
Is Paramount Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PSKY stock based on five Holds and five Sells assigned in the past three months, as indicated by the graphic below. After a 11.24% loss in its share price over the past year, the average PSKY price target of $11.38 per share implies 11.08% upside potential.
